The archived blog of the Project On Government Oversight (POGO).

Jun 18, 2010

A Win for Transparency in Financial Reform

We’re happy to report that the financial reform
conference
committee has improved unacceptable secrecy measures in the legislation.

This week, the conference committee tackled reforming the
Securities and Exchange Commission (SEC), and replaced a
poison pill secrecy provision in that title with a much narrower
exemption
to protect the identity of whistleblowers who provide the agency with
tips. Although POGO and other groups found an exemption to
the
Freedom of Information Act (FOIA) to
be unnecessary to achieve whistleblower confidentiality, we are
pleased
that House Financial Services Committee Chairman Barney Frank (D-MA)
offered a
far more acceptable compromise between the House and Senate language.

The initial
conference bill, adopted from the Senate bill, actually contained
two gag
orders tucked into otherwise excellent provisions to strengthen and
expand
whistleblower reward programs. The conference committee has improved on
the
poison pill secrecy provision in the SEC title, but there is a very
similar
provision that still needs to be replaced in a section that would create
an identical
whistleblower reward program at the Commodity Futures Trading Commission
(CFTC).

Both secrecy provisions were offered under the
guise of
whistleblower confidentiality, but would exempt from FOIA all of the information pertaining to investigations,
preventing the
public from ever being able to know what happened – even if no action
was taken
due to inept bureaucracy, fraud, collusion, or worse (not surprisingly,
POGO
heard the language for these secrecy provisions originated at the
SEC). While
perhaps inadvertent, whistleblowers also would not be able to access
government
records, even when needed to prove their status as a whistleblower.
These
provisions were like putting the whistleblower and the investigations in
solitary confinement when a seal on the identity of the whistleblower
was all
that was needed.

Although that amendment didn’t make it into the
bill, Senator
Leahy’s amendment to study the FOIA exemption did. It and the SEC compromise passed in the conference strikes a
far
better balance between accountability and confidentiality than in the
original
Senate version. We strongly urge the conferees to apply the same
provision
to the reward program at CFTC, with one caveat: disclosure of the
identity
of a whistleblower to entities registered as members of a securities
exchange
must be removed.

We applaud Senator Leahy and his diligent staff for
fighting
to maintain the public’s ability to access crucial information and
protect
whistleblowers, and we also thank Representative Frank and House
Oversight and Government Reform Committee Chairman
Edolphus Towns
(D-NY) and their staff for producing a careful compromise supported by
the
conferees.